Sixty-eight years. Twenty-four programs. One nation repeatedly turning to one financier for the same old reasons again and again. This is the true tale of how Pakistan has interacted with the IMF – and if anything will be different in 2026
Pakistan IMF history does not originate from some one-off crisis situation. It began in 1958 when the regime of Gen Ayub Khan concluded a Standby Arrangement amounting to $25 million, which was the country’s first official borrowing from the Fund. No one at that point in time could foresee what was to come next. Sixty-eight years down the line, Pakistan is at number 24 as far as visiting the lending rooms of the IMF is concerned.
That alone is an illustration of a history most countries do not even have to write. For 34 of the last 65 years, Pakistan has been participating in an active IMF program of one sort or another, which translates to say that for the greater part of its existence after independence, Pakistan has been living within IMF conditionality.
Each Government Era, the Same Entrance
Pakistan IMF history is one which has witnessed each regime and military rule that the nation has gone through, without fail. It was initially begun by Ayub Khan in 1958, who made a re-entry in both 1965 and 1968. Zulfikar Ali Bhutto also visited the door thrice during his term, utilizing about 314 million SDRs from a total of 330 million promised to him.
Civilian governance did not make any difference to this trend. Both Benazir Bhutto and Nawaz Sharif turned to the Fund no less than eight times during their alternating tenures in the 1990s, where the PPP turned five times and PML-N three. Even Gen. Pervez Musharraf, despite several years of healthy economic growth and money coming from abroad due to post-9/11 geopolitics, had to return to the IMF twice.
This trend persists even till today. The government led by Asif Ali Zardari managed to get the largest IMF deal that Pakistan ever got, 4.94 billion SDR, in 2008. The third tenure of Nawaz Sharif government provided the second-largest deal, 4.399 billion SDR, in 2013. The government of Imran Khan, belonging to PTI, despite efforts to stay away from the IMF by getting the financial help of Saudi Arabia, UAE, and China bilaterally, ended up signing their own deal worth $6 billion in 2019.
“One-Tranche Nation” Challenge
Pakistan’s past association with the IMF holds an undesirable moniker among the field of development economics – that of being labeled the “one-tranche nation.” This is an indication of the tendency on the part of Pakistan to sign an agreement, receive an early tranche of the loan but then disappear without adhering to the difficult structural requirements of the program.
It is due to such a model that Pakistan has developed so many programs of its own instead of fewer but more comprehensive ones. Out of the $31.23 billion provided to Pakistan by the IMF since 1958, only $17.85 billion has been used, making the program a true example of the “one-tranche” approach.
Where the True Damage Has Been Caused
What caused the true damage to the history of Pakistan and its relation with the International Monetary Fund was not the act of borrowing but what did not happen when that breathing space was provided. Pakistan’s external debt grew from about $10 billion in 1980 to $43 billion in 2007, owing largely to mismanagement, high defense expenditures because of Pakistan’s involvement in the Afghan-Soviet war and later the war on terror, and poor internal taxation.
This weakness in generating revenues persists as the one most enduring element linking all the programs the IMF has ever had Pakistan sign up to. The level of tax revenues generated as a proportion of the country’s GDP has remained persistently low through decades past, due to tax evasion on a large scale, lack of taxing agricultural incomes properly, and disagreements between Islamabad and the provincial governments over fiscal federalism issues. All the programs start with assurances of expanding the revenue base.
The Current Situation in 2026
Pakistan’s IMF story came to an end at the latest stage in September 2024 when the Fund authorized a three-and-a-half-year Extended Fund Facility worth $7 billion for the country – the 24th such program for Pakistan since 1958. In contrast to the majority of previous programs, this one has been implemented in a really consistent way. The IMF conducted the third review of the EFF in May 2026 along with the second review of the RSF of 28 months that was authorized in May 2025.
This time around, the statistics speak well compared to previous episodes at the same juncture. Economic growth is accelerating, the inflation situation is under control, and the country registered a current account surplus for the first time in 14 years in FY25. The foreign exchange reserves have been increasing and are being buoyed by reserve rebuilding efforts which have surpassed the expectations of the Fund itself. The State Bank has lowered its policy rate cumulatively by 1,100 basis points since mid-2025 because of falling inflation.
Despite these better results, there is nothing about Pakistan’s past experience with the IMF that indicates a possibility of an unsoiled exit from the program. According to the reports made by the IMF staff, the situation with the war in the Middle East makes Pakistan’s perspective rather uncertain. Moreover, the Fund mentions that Pakistan’s debt-to-GDP ratio continues to be significantly higher than the allowed 58 percent legal limit.
The phenomenon of government borrowing crowding out private credit continues, with over 80% of lending going to the government sector and not to productive enterprises. Energy-sector reforms, which have been an integral part of almost all IMF programs since the 1980s, are incomplete, although circular debts are still increasing despite the slowdown of tariff adjustments. Reform and restructuring of state-owned enterprises and privatizations, which have been promised time and again for many years, are progressing at a pace which, as described by the Fund, requires political will, which is usually lacking once the crisis is over.
Will Pakistan Finally Manage to Escape?
The truth that lies at the heart of Pakistan’s IMF experience is an unpleasant one. Real escape from the cycle has never been about making sure the next loan was secured; all the governments have been good at doing this. It is all about whether the structural changes last through the periods of time between crises, when the political motivation for fiscal prudence is low.
The current EFF round demonstrates more discipline than some of the rounds preceding it, while the macroeconomic fundamentals actually justify cautionary optimism. However, Pakistan’s experience in dealing with the IMF has provided one clear lesson through 24 programs: good behavior during an ongoing program tells us nothing of what follows once the program is officially concluded. Unless taxes, energy prices, and management of state enterprises become sustainable as a result of the Pakistani government’s own volition and not the IMF’s insistence, Washington will still be at the ready, as it has always been in the past.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
